Buoyant Economy Means Higher Hotel, Air Prices
Travel prices are expected to rise sharply in 2019, with hotels going up 3.7% and flights 2.6%, driven by a growing global economy and rising oil prices, according to the fifth annual Global Travel Forecast, published by the Global Business Travel Association (GBTA) and CWT with the support of the Carlson Family Foundation.
“While most major markets appear to be trending in the right direction, downside risks remain for the global economy given the rise of protectionist policies, the risk of stoking trade wars and Brexit uncertainty,” said Michael W. McCormick, GBTA executive director and COO. “This forecast provides travel buyers with a better understanding of the global market and key price drivers demonstrating the key to building successful travel programs will be watching and reacting to an ever-changing global landscape.”
“Prices are expected to spike in many global markets even as inflation remains subdued,” said Kurt Ekert, president and CEO, Carlson Wagonlit Travel. “The report explores the causes and includes an overview of what we expect to see in key markets worldwide. It also gives specific recommendations, giving travel managers ammunition for their upcoming negotiations.
“The future of corporate travel can be summed up as accelerated personalization – with mobile technology, AI, machine learning and predictive analytics all playing their part,” added Ekert. “Success is tied to technology, with sophisticated data-crunching at the very heart of it.”
According to the forecast, the aviation sector will be shaped by the introduction of ultra-long-haul flights and an increasing competition from low-cost carriers, which are not only multiplying, but also fighting for long-haul routes.
Airfares are likely to become more expensive due to rising oil prices, the competitive pressure from the shortage of pilots, potential trade wars and increasing fare segmentation to improve yield.
It’s predicted North America will see prices rise by a modest 1.8%, according to projections.
The hotel outlook for 2019 is driven by the overall increase in air travel, which will fuel demand for rooms. Technology will also play an important part. Hotels are introducing new developments to personalize the guest experience. The increase of mobile penetration, on the other hand, is forcing travel managers to offer their travellers apps, which also serve to accommodate greater in-policy booking autonomy.
Further mergers – and upscale hotels competing with mid-scale ones due in part to a growing appetite for boutique accommodation among younger travellers – will also be on the agenda.
2019 will also see a growing preference among travellers for ride-hailing apps while interest in high-speed trains is fading, due to high network costs and low-tech distribution systems.
